Finance Minister Jim Flaherty is warning the Canadian economy stands to feel the tremors from the political and financial quake in Greece.

The increased alarm over possible aftershocks from Europe follows a decision by the European Central Bank to cut off some troubled Greek banks over reports of a flight of deposits from the under-capitalized institutions.

About US$900 billion in deposits have fled Greek banks since the May 7 election, according reports.

Meanwhile, the lack of a functioning government has shaken confidence that the country will follow through on austerity commitments or that it can even remain in the eurozone.

« These are not good developments. This can create a shock that will affect Canada, » Flaherty told a Senate committee Wednesday.

« Our financial institutions have a limited exposure to the Greek banking system, but global banking is interrelated and shocks in the European banking system can have negative effects… in the American banking system and have some effects on the Canadian banking system as well. »